John Afriyie, Insider Trading, New York 2016

John Afriyie, a former Wall Street investment fund analyst, was found guilty this afternoon in Manhattan federal court of securities fraud and wire fraud for committing insider trading. Afriyie, 29, of Freehold, New Jersey, made approximately $1.5 million in profits in connection with stock options he purchased based on material nonpublic information he misappropriated from the Fund about an impending acquisition of ADT Corporation.

Afriyie repeatedly accessed material nonpublic information about Apollo’s pending acquisition of ADT in an electronic shared drive folder on the Fund’s network server. In approximately 28 separate transactions between January 28, 2016, and February 12, 2016, Afriyie purchased approximately 2,279 ADT call options for a total of $24,254.02 before the public announcement of that transaction.

Afriyie purchased the ADT call options through a brokerage account in the name of Afriyie’s mother, which Afriyie controlled. Afriyie did not reveal his trades or the existence of the brokerage account to the Fund. As cover for his criminal scheme, Afriyie repeatedly pretended to be his mother in recorded telephone calls with his broker.

The public announcement of Apollo’s acquisition of ADT in February 2016 caused ADT shares to increase in value from $29.20 per share on the day Afriyie began purchasing ADT options to $39.64 per share, resulting in a corresponding increase in the value of the call options Afriyie had purchased. Upon subsequently selling the ADT options, Afriyie generated over $1.5 million in illicit profits.

Manhattan U.S. Attorney Preet Bharara said, ‘As a unanimous jury found today, John Afriyie, an investment fund analyst, made $1.5 million in illegal profits by trading in ADT stock, using inside information about ADT that he had obtained from the fund’s servers. To cover up his insider trading scheme, Afriyie destroyed incriminating emails and even claimed his own voice on a recorded call to his broker was actually his mother’s. The jury saw through Afriyie’s deception, and he now stands convicted of federal crimes.’

Afriyie was convicted of one count of securities fraud and one count of wire fraud, each of which carries a statutory maximum sentence of 20 years in prison. Afriyie was remanded on January 23, 2016, after he refused to appear in court for trial, and he remains in custody. The statutory maximum sentence for each count is 20 years in prison, and the court will determine the sentence at a later date.

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